CBN Affirms Confidence in Skye Bank, Institutes Guarantee Line

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Nume Ekeghe with agency report
The Central Bank of Nigeria (CBN), has affirmed its confidence in Skye Bank Plc., through a guarantee line which ensures that withdrawals it suffered in the wake of undue panic recently does not adversely affect its operations.

This development analysts believe lends credence to the regulator’s earlier assertion that Skye Bank is a Strategically Important Bank (SIB), with substantial market share, interconnectedness and significant relevance to the nation’s financial systems stability.

Bloomberg, reported that the central bank confirmed this development through its spokesman, Isaac Okoroafor, who stated that the undisclosed guarantee sum would assist the bank to shore up its liquidity and maintain its level of operations.

“The short-term lending facility will allow the management of the bank to ensure that some withdrawals it suffered in the wake of the undue panic of last week do not adversely affect its operations,” Okoroafor was quoted to have said.

In addition, “the CBN issued guarantees to depositors and creditors of Skye Bank as a demonstration of the bank’s health”, Okoroafor further explained.

The guarantee line is coming on the heels of CBN’s recent intervention in the bank following the voluntary resignation of the Board of Directors of the bank and the consequent re-constitution of the Board with a new management team led by Mr. M.K. Ahmad and Mr. Adetokunbo Abiru, who emerged as Chairman and Group Managing Director respectively.

The CBN guarantee will not only enhance Skye Bank’s interbank trading and activities; but will also provide assurance to the other banks to continue to deal with and trade with the bank’s instruments in the interbank market.

The CBN had similarly introduced a bank credit guarantee package for some banks in 2009 in the wake of the global economic crisis which affected both the local and global financial markets. The bank guarantee programme enables financial institutions to meet their financing needs during a period of record high credit spreads and aids the successful return of the credit market to near normalcy, despite the recession and slow economic recovery.

The affirmation of confidence in Skye bank continues to grow as no fewer than two state governments have expressed confidence in the bank’s ability to deliver on crucial mandates in the last two weeks. First, it was the Lagos State government, which directed its ministries, departments and agencies to establish business relationship with the bank on account of its track record and pedigree in mandate execution.